( Weighted average cost of capital ?) The capital structure for the Carion Corpo
ID: 2658578 • Letter: #
Question
(Weighted average cost of capital?) The capital structure for the Carion Corporation is provided?. The company plans to maintain its debt structure in the future. If the firm has an? after-tax cost of debt of 6.7 percent, a cost of preferred stock of 12.1 ?percent, and a cost of common stock of 17.4 ?percent, what is the? firm's weighted average cost of? capital?
A.) The? firm's weighted average cost of capital is ()%.?(Round to two decimal? places.)
Bonds 1,111 Pefered stock 271 common stock 3,536 4,918Explanation / Answer
Bonds
1,111
Preferred stock
271
common stock
3,536
Total
4,918
WACC = Weighted average cost of capital;
WACC = Cost of equity x Weight of equity + Cost of preferred share x Weight of preferred share + Cost of debt x Weight of debt
WACC = 17.4% x 3536/4918 + 12.1% x 271/4918 + 6.7% x 1111/4918
WACC = 14.69%
Bonds
1,111
Preferred stock
271
common stock
3,536
Total
4,918
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.